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Providing coverage of Alaska and northern Canada's oil and gas industry
November 2008

Vol. 13, No. 46 Week of November 16, 2008

40 Years at Prudhoe Bay: What would Alaska look like without oil industry?

Economist says 49th state would bear strong resemblance to East Coast state of Maine

Nancy Pounds

For Petroleum News

Without the oil industry as an economic power-player, Alaska might resemble Maine — more taxes, no Permanent Fund dividend, an older population with slower growth and a much-reduced gross state product.

Scott Goldsmith, economics professor at the University of Alaska Anchorage’s Institute of Social and Economic Research, suggests the comparison in his spring 2008 report, “How North Slope oil has transformed Alaska’s economy.”

“The idea here is to conduct a thought experiment a la Einstein to think about what state Alaska would most resemble if oil had never been found on the North Slope,” Goldsmith said.

Both states have many moose, few humans, a cold climate, a remote location and an independent streak, Goldsmith said.

The two states also find strength from identical industries: fishing, tourism, timber, mining and agriculture, he noted. Maine and Alaska are both constrained by limits on sustainable harvests, from the fishing industry, for example. Both states have small and declining manufacturing industries, and the states depend on federal funds, Goldsmith said. Alaskans and Maine residents possess “conflicting visions about the use of resources,” he said.

Maine and Alaska are different, however, according to Goldsmith’s research.

“Throughout the second half of the 20th century, Maine has struggled to find a proper balance between resource-based industrial development and environmental protection,” Goldsmith wrote. “The state has come to rely heavily on tourism, small manufacturing enterprises and defense-related activities and installations for much of its economic base.”

Economic factors emphasize the difference between Maine and Alaska, Goldsmith noted, citing recent data. While Alaska ranks seventh nationwide in gross state produce per capita, Maine is 43rd. The median paycheck in Maine is 77 percent as high as the median paycheck in Alaska. Alaska’s job growth exceeded Maine’s in recent statistics. Alaska ranked fifth nationwide in population growth, while Maine was 46th. Maine’s projected population growth is only one-third of the U.S. average, but Alaska’s population should grow 30 percent more than the national average, Goldsmith cited.

Unlike Alaska, Maine is physically attached to the continental United States. Another difference from Alaska is that Maine’s Native American population is much lower, registering 1 percent, Goldsmith figured. Also, the federal government owns much less land in Maine, about 1 percent, than it does in Alaska.

Maine residents pay state income tax, unlike Alaskans. And Alaskans, not Mainiacs, receive the annual Permanent Fund dividend, paid out from an investment fund created with oil money paid ($2,069 in 2008) to the state.

“If the oil industry had never been here, we wouldn’t have those things (like the Permanent Fund and its dividend),” Goldsmith said. “We would look different.”






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